Shinzo Abe has the best chance in decades of changing Japan for the better. He seems poised to take it

Jun 28th 2014

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DURING Japan’s Meiji restoration, which began in 1868, a group of reform-minded officials and citizens worked together to stamp out feudalism, prise open borders and push the country onto a path of rapid industrialisation.In little over ten years they reshaped Japan from top to bottom. That well-known tale has left a perennial optimism among the Japanese that they can, when absolutely necessary, change direction. Others, especially foreigners, are not so sure. In two decades of economic stagnation Japan’s leaders have repeatedly failed to rescue their country’s fortunes.Shinzo Abe, Japan’s prime minister since 2012, has offered something for both sides.He started surprisingly well. Last year, with Meiji speed, he shot off the first two arrows of “Abenomics”: a huge fiscal stimulus and a dramatic programme of monetary easing. His approval rating soared, as did the stockmarket, and his Liberal Democratic Party (LDP) triumphed in an election for the upper house of the Diet, Japan’s parliament. But hisfirst attempt at a third arrow of structural reforms to unleash growth, an announcement in June 2013, fell flat.He seemed to have been nobbled by Japan’s various lobbies. Then in December he paid a visit to the Yasukuni shrine which, taken as a symbol of reverence for Japan’s criminal militarist past. That infuriated outsiders and strengthened suspicions that his focus on economic reform had wavered.

This week Mr Abe is back with a properthird arrow.There aretworeasons for thinking that this time it will hit the target. First, the country has reached a point at which almost all Japanese realise that reform of some sort is needed.Second, Mr Abe is at last pursuing schemes of such breadth that they touch on nearly every area of the economy that demands change.

The wrinkled society

Japan has changed in the 20 years of stagnation. Demography is the main reason. Like telltale greyhairs, the signs of ageing are everywhere. A think-tank has just predicted that some900municipalities, orhalf of the total, will have disappeared by 2040, as women of childbearing age migrate to big cities. Centenarians are the fastest-growing segment of the population, and over one-tenth of houses are already vacant, chiefly because of ageing. The workforce is shrinkingso fast that even Japan’s often sexist and xenophobic elite is discussing subjects such as higher immigration and encouraging women to get a job. Among farmers, whose average age is a staggering70, resistance to reform from those who wish to keep agriculture small-scale and inefficient is dying along with the resisters.Another prompt is sluggish growth. Twenty years of underperformance has practical consequences. It helps explain why the nation’s companies increasingly belong to foreigners, who now own 30% of the stockmarket in total, up from4% in 1989. Shareholder capitalism is spreading and many large firms are setting themselves ambitious aims for profitability. That greatly aids Mr Abe’s goal of forcing Japan Inc to invest its huge pile of savings, rather than hoard them, and to improve the allocation of capital. Foreign shareholders are also likely to argue for more rapid change to Japan’s post-war system of lifetime employment, which is slowly keeling over. Nearly5mprotected, permanent staff are now surplus to requirements yet cannot be laid off, even with severance pay. Meanwhile almost two-fifths of Japan’s employees, especially the young and female, are stuck in irregular, low-paid jobs.The third prompt is China’s rise. Voters now understand the need for Japan to stand up for itself. That leads to some ugly nationalist poses, but it also makes economic reform seem more urgent—even to ugly nationalists.Mr Abe’s reform plan is far weightier than its predecessors.It seeks to free up an overly restrictive health-care sector, to ease the way for local and foreign entrepreneurs in Japan and to overhaul corporate governance. Some measures take on deep cultural taboos, such as allowing Japanese households in a series of special economic zones to sponsor foreign maids to help care for children and the old. And more is still to come. Together, all this represents a coherent vision of a more innovative and globally minded society. Part of its strength is its breadth: it is less a single arrow than a 1,000-strong bundle of acupuncture needles.That Mr Abe’s approval ratings are still so high after announcing his intention to tackle sensitive areas is a sign that the public is ready for fresh thinking.Japan’s previous effort at a radical overhaul was led by Junichiro Koizumi, prime minister in 2001-06. His successors diluted his reforms. (Oneof the main villains was his protégé, Mr Abe, whose first, disastrous, term as prime minister lasted only a year.) Nowadays, Mr Abe faces little serious opposition outside the LDP: the opposition Democratic Party of Japan is nowhere nearreviving itself after itstrouncing at the polls in December 2012.That opinion is shifting in favour of reforms does not mean the country is united behind them. Many powerful interest groups, from farmers to doctors to big business to—strongest of all—the civil service, will fight them. Yet the sheer ambition of the growth plan that the cabinet approved this week is evidence of Mr Abe’s determination to act as a “drill bit” inspite of them all.

Tries, shoots and leaves?

Mr Abe likes to quote Shoin Yoshida, an intellectual who inspired the Meiji’s reformers: “Once a man’s will is set, he can triumph through any obstacle.”But much still depends on whether enough reforms are enacted in full, without codicils that stealthily neuter their impact, and on when they will take effect. In some areas—notably the labour market, where permanent workers enjoy excessive protection—Mr Abe must go further. And across the range of reforms, he will have to force change on those still determined to resist.Mr Abe needs to stay focused on his target and avoid being hobbled by interest-groups or sidetracked by nationalism. But the scale of what he has put forward this week is breathtaking. It offers the best chance for many years of revitalising Japan. That is something everybody should welcome.

A final number for real US GDP growth in the first quarter of 2014 was released today.The number is not the 2.6% growth rate predicted by the know-nothing economists in January of this year. The number is adecline in GDP of -2.9 percent.The negative growth rate of -2.9 percent is itself an understatement. This number was achieved by deflating nominal GDP with an understated measure of inflation. During the Clinton regime, the Boskin Commission rigged the inflation measure in order to cheat Social Security recipients out of their cost-of-living adjustments. Anyone who purchases food, fuel, or anything knows that inflation is much higher than the officially reported number.It is possible that the drop in first quarter real GDP is three times the official number.Regardless, the difference is large between the January forecast of +2.6 percent growth and the decline as of the end of March of -2.9 percent. Any economist who is real and unpaid by Wall Street, the government, or the Establishment knew that the +2.6 percentforecast was a crock. Americans’ incomes have not grown except for the one percent, and the only credit growth is in student loans, as those many who cannot find jobs mistakenly turn to “education is the answer.” In an economy based on consumer demand, the absence of income and credit growth means no economic growth. The US economy cannot grow because corporations pushed by Wall Street have moved the US economy offshore. US manufactured products are made offshore. Look at the labels on your clothes, your shoes, your eating and cookingutensils, your computers, whatever. US professional jobs such as software engineering have been moved offshore. An economy with an offshored economy is not an economy. All of this happened in full view, while well-paid free market shills declared that Americans were benefiting from giving America’s middle class jobs to China and India.I have been exposing these lies for a decade or two, which is why I am no longer invited to speak at American universities or to American economic associations.Economists love the money that they receive for lying. A truth teller is the last thing that they want in their midst.An official decline of -2.9 percent in the first quarter implies a second quarter GDP decline. Two declines in a row is the definition of recession. Imagine the consequences of a recession.It means that years of unprecedented Quantitative Easingfailed torevive the economy. It means that years of Keynesian fiscal deficits failed to revive the economy. Neither fiscal nor monetary policy worked. What then can revive the economy? Nothing except to force the return of the economy that the anti-American corporations moved offshore.This would require credible government.Unfortunately, the US government has been losing credibility since the second term of the Clinton regime. It has none left.Today no one anywhere in the world believes the US government except the brain dead Americans who read and listen to the “mainstream media.” Washington’s propaganda dominates the minds of Americans, but produces laughter and scorn everywhere else. The poor US economic outlook has brought America’s twolargest business lobbies–the US Chamber of Commerce and the National Association of Manufacturers (or what is left of them) into conflict with the Obama regime’s threat of further sanctions against Russia.According to Bloomberg News, beginning tomorrow (June 26), the business groups will run advertisements in the New York Times, Wall St Journal, and Washington Post opposing any further sanctions on Russia.The US business organizations say that the sanctions will harm their profits and result in layoffs of American workers. Thus, America’s two largest business organizations, important sources of political campaign contributions, have finally added their voice to the voices of German, French, and Italian business.Everyone, except the brainwashed American public, knows that the “crisis in Ukraine” is entirely the work of Washington. European and American businesses are asking: “why should our profits and our workers take hits in behalf of Washington’s propaganda against Russia.” Obama has no answer. Perhaps his neocon scum, Victoria Nuland, Samantha Powers, and Susan Rice can come up with an answer. Obama can look to the New York Times, Washington Post, Wall Street Journal, and Weekly Standard to explain why millionsof Americans and Europeans should suffer in order that Washington’s theft of Ukraine is not endangered.Washington’s lies are catching up with Obama.German chancellor Merkel is Washington’s complete whore, but German industry is telling Washington’s whore that they value their business with Russia more than they value suffering in behalf of Washington’s empire. French businessmen are asking Hollandewhat he proposes to do with their unemployed workers if Holland goes along with Washington. Italian businesses are reminding thatgovernment, to the extent that Italy has one, that uncouth Americans have no tastes and that sanctions on Russia mean a hit to Italy’s most famous and best recognized economic sector–high style luxury products.Dissent with Washington and Washington’s two-bit puppet rulers in Europe is spreading. The latest poll in Germany reveals that three-quarters of Germany’s population reject permanent NATO bases in Poland and the Baltic states. The former Czechoslovakia, currently Slovakia and the Czech Republic, although NATO members, have rejected NATO and American troops and bases on their territory. Recently, the Polish foreign minister said that pleasing Washington required giving free oral sex for nothing in return.The strains that Washington’s morons are putting on NATO might break the organization apart.Pray that it does. NATO’s excuse for existence disappeared with the Soviet collapse23 yearsago. Yet, Washington has increased NATO far beyond the borders of the North Atlantic Treaty Organization. NATO now runs from the Baltics to Central Asia. In order to have a reason for NATO’s continued expensive operation, Washington has had to construct an enemy out of Russia.Russia has no intention of being Washington’s or NATO’s enemy and has made that perfectly clear. But Washington’s military/security complex, which absorbs about $1 trillion annually of US hard-pressed taxpayers’ money, needs an excuse to keep the profits flowing. Unfortunately the Washington morons picked a dangerous enemy. Russia is a nuclear armed power, a country of vast dimensions, and with a strategic alliance with China. Only a government drowning in arrogance and hubris or a government run by psychopaths and sociopaths would pick such an enemy. Russia’s President Vladimir Putin has pointed out to Europe that Washington’s policies in the Middle East and Libya are not merely total failures but also devastatingly harmful to Europe and Russia. The fools in Washington have removed the governments that suppressed the jihadists. Now the violent jihadists are unleashed. In the Middle East the jihadists are at work remaking the artificial boundaries set by the British and French in the aftermath of World War I. Europe, Russia and China have Muslim populations and now must worry if the violence that Washington has unleashed will bring destabilization to regions of Europe, Russia and China.No one anywhere in the world has any reason to love Washington. Least of all Americans, who are being bled dry in order that Washington can parade military force around the world. Obama’s approval rating is a dismal41 percent and no one wants Obama to remain in office once his second term is complete. In contrast, two-thirds of the Russian population want Putin to remain president after 2018. In March the poling agency, Public Opinion Research Center, released a report that Putin’s approval rating stood at 76 percent despite the agitation against him by the US financed Russian NGOs, hundreds of fifth column institutions that Washington established in Russia during the pasttwo decades.On top of US political troubles, the US dollar is in trouble.The dollar is kept afloat by rigged financial markets and Washington’s pressure on its vassal states to support the dollar’s value by printing their own currencies and purchasing dollars. In order to keep the dollar afloat, much of the world will be inflated. When people finally catch on and rush into gold, the Chinese will have it all.Sergey Glazyev, an adviser to President Putin, has told the Russian president than only an anti-dollar alliance that crashes the US dollar can halt Washington’s aggression.That has long been my opinion. There can be no peace as long as Washington can print more money with which to finance more wars. As the Chinese government stated, it is time to “de-Americanize the world.” Washington’s leadership has totally failed the world, producing nothing but lies, violence, death, and the promise of more violence. America is exceptional only in the fact that Washington has, without remorse, destroyed in whole or part sevencountries in the new 21st century. Unless Washington is replaced with more humane leadership, life on earth has no future.

If you know the other and know yourself, you need not fear the result of a hundred battles.

Sun Tzu

We are travelers on a cosmic journey, stardust, swirling and dancing in the eddies and whirlpools of infinity. Life is eternal. We have stopped for a moment to encounter each other, to meet, to love, to share.This is a precious moment. It is a little parenthesis in eternity.